Portugal cuts BES bailout to €3.9bn

August 08, 2014 - 12:00:00 am
Portugal’s Finance Minister Maria Luis Albuquerque (right) arrives to speak about the BES bailout in parliament in Lisbon yesterday.


LISBON: Lisbon will cut its bailout for stricken Portuguese lender Banco Espirito Santo to €3.9bn thanks to contributions from the financial sector, Finance Minister Maria Luis Albuquerque said yesterday.

The state had initially pledged €4.4bn in aid as part of a €4.9bn rescue package for BES announced on Sunday in a bid to stop its collapse plunging the fragile economy into further crisis.

“The state will grant a loan, which now is limited to 3.9 billion euros because the banks wanted to take on their responsibilities in a more direct and immediate manner,” the minister said in parliament.

“The repayment of the loan to the Treasury and taxpayers will take place, no matter the time or the amount for which the new bank will be sold,” said Albuquerque.

“The responsibility belongs exclusively to the financial sector,” she added, adding that the loan will be paid back in the next two years.

BES, once one of Portugal’s largest lenders, was in dire straits after reporting a record loss last month, while three of its parent companies had filed for bankruptcy amid allegations of accounting fraud.

On Sunday it was announced it will be split into two banks: Novo Banco will take the capital injection and all of the bank’s viable assets, while the so-called “bad bank” BES will house all of its toxic assets.

The opposition had alleged that rescuing the bank could place a fresh burden on taxpayers already struggling with austerity measures imposed during the eurozone debt crisis.